Certificates of Deposit - What is it?

Define Certificate of Deposit (aka CD) and what is a domestic CD and what are the International CD options such as Offshore CD or Eurodollar Certificates of Deposit. The advantages of International CD are higher interest rates, income tax benefits, anonymity. BNP, Banco Nacional do Panama. London Interbank Offered Rate (LIBOR) discussed.




Certificates of Deposit - What is it?

Commonly referred to as a CD, a Certificate of Deposit can be used as a short or long term investment. Domestic banks offer FDIC (Federal Deposit Insurance Corporation) insured Certificates of Deposit with higher rates of return than other investment options. The bank retains money for a specified period of time with the promise to repay the principal and interest to the depositor at the conclusion of the investment term.

Depending on the amount of money you invest, and the particular terms of the bank you choose to invest with, you may choose to invest your money for a period as short as one month to six years. There is usually a penalty for withdrawing money from a CD prior to the maturity date. Banks will also require a minimum deposit to open a Certificate of Deposit.

OFFSHORE CERTIFICATES OF DEPOSIT

International Certificates of Deposit vary slightly from domestic CDs. International Certificates of Deposit can also be referred to as Offshore Certificates of Deposit or Eurodollar Certificates of Deposit. When obtaining a Certificate of Deposit<<<<<<</a>/a>/a>/a>/a>/a>/a> from an offshore bank, the investor signs an agreement with the bank in which the bank agrees to pay a fixed interest rate in exchange to use the money during the specified time period.

Similar to domestic banks, offshore banks have different needs to use as a CD minimum amount of deposit. Often the amount required for an Offshore Certificate of Deposit will be much higher than what is traditionally required from domestic banks.

There are several advantages to having a Certificate of Deposit from an offshore bank. The advantages include:

1. Higher interest rates. Unlike domestic banks, offshore banks are not government regulated and are free to compete against each other for better rates. Depending on the country you choose to bank in, interest rates can be as high as ten percent.

2. Another advantage to having an Offshore Certificate of Deposit is the income tax benefits. If you choose to open a Certificate of Deposit in a recognized tax haven such as Panama, you will not be taxed on interest earned because that particular government does not impose interest on income taxes.

3. A third major advantage to an Offshore Certificate of Deposit is the anonymity and confidentiality offered to protect your assets. Depending on the jurisdiction you choose to obtain your Certificate of Deposit, the bank may be forced to adhere to strict secrecy laws which protect your money from creditors and divorce. Also, since offshore banks are outside the jurisdiction of domestic courts those wishing to sequester your funds for whatever reason will be unable to do so.

INSURANCE ON OFFSHORE BANK ACCOUNT CD

Unlike domestic banks, an offshore bank cannot offer Certificates of Deposit which are FDIC insured. Rather, these banks have their own methods of insuring investment money which guarantee that at any given time the bank has enough money in its reserves to cover all deposits made.

For example, in Panama all banks are required to report each month to the BNP (Banco Nacional do Panama) to ensure they have enough reserves to cover deposits made. Compliance officers are assigned to the banks to make sure depositor's funds are not misappropriated. Additionally, offshore banks will often maintain large insurance policies to cover depositor's funds for amounts over what is normally covered by the BNP.

EURODOLLAR CERTIFICATES OF DEPOSIT

Eurodollar Certificates of Deposit are issued in London according to the rates listed on the London Interbank Offered Rate (LIBOR). This interest rate is calculated on a daily basis by the British Banker's Association. Several countries that rely on LIBOR for calculating the rates for Certificates of Deposit are England, the United States, Switzerland, and Canada. Eurodollar Certificates of Deposit, while being issued outside the United States, are still denominated in American currency.

When choosing to open an International Certificate of Deposit, it is important to consult with a financial advisor. Your advisor will be aware of minimum deposits required to open the account, any penalties for withdrawing money early, the stability of the bank you choose to invest with, and the denomination your money will be kept in. Your advisor will also help you choose the appropriate length of time to keep your money tied up in a CD to offer you the best return of investment.

author bio - Rocco Beatrice, CPA, MST, MBA

award-winning estate planning, trust expert

MS - Taxation, Master of Science Taxation

MBA - Management / Taxation

BSBA - Management / Accounting

CPA - Certified Public Accountant

-----

Irrevocable Trust Asset Protection, Estate Planning

International Bank of Commerce

Original article posted here: Certificates of Deposit [http://www.ultratrust.com/finance/certificates-of-deposit.html]

71 Commercial Street #150, Boston, MA 02109

tel: +1.508.429.0011 fax: +1.508.429.3034

credit Link

http://www.ultratrust.com
http://www.ultratrust.com/finance/international-bank-commerce.html

certificate of deposit

Certificate of Deposit (CD) Basics

Certificate of deposits are great ways to save money and make a little profit from interest. Many financial advisors will suggest certificate of deposits as an alternative to a traditional savings accounts.




Certificate of Deposit (CD) Basics

"Never be frightened to take a profit. Better in your pocket then theirs." -Michael Levy

Certificate of deposits are great ways to save money and make a little profit from interest. Many financial advisors will suggest certificate of deposits as an alternative to a traditional savings accounts. Certificates of deposits (CDs) can be purchased from a brokerage firm, credit union, bank, or savings and loan institution. When purchasing a CD you are agreeing to leave a set amount of money with the bank for a set period of time. In return, the financial institution will pay you interest on that money and when the CD matures you will get your initial money back and small profit. There are many different types of certificates of deposits. Below is some basic information about CDs and some guidelines for choosing the right investment.

A key factor in determining which CD is right for you is the minimum deposit required to open up a CD. To receive the banks increased interest rate you must deposit at least the minimum deposit amount into the account. While most lending institutions offer affordable CDs for the average consumer, there are organizations which require thousands of dollars to open up a CD. Make sure you shop around and find a minimum deposit amount that works for you.

Another factor which can influence your CD choice is maturity length. Maturity length refers to how long you will have to keep your money in the CD. Maturity length can vary from just one month through 48 months. Many banks offer flexible maturity lengths. This allows the investor to open a CD at a maturity length of one month and then decide, after that month has past, to keep it in the CD for an additional length of time. The longer the maturity period the more profit you are going to receive from the account. However, if you need to access that money early you will have to pay early withdrawal fees which can be fairly pricey. The interest paid on a CD can also vary. Be sure to ask your savings institution when interest will be applied. It can be compounded yearly, twice a year, four times a year, monthly, and even every day.

There are also several ways you will receive your interest payments. You have it deposited directly into your CD account and it will continue to receive interest like the rest of your CD. You can have the interest payment mailed to your home or deposited into a checking or savings account. Certificates of deposits are great options for people looking for a stable and consistent growth in their money. The main concern with CDs is liquidity. If you are interested in opening up a CD account speak with your local bank or contact a financial advisor.

Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.

credit Link

http://www.global-investment-institute.com

certificate of deposit

Lock in a Rate of Return With a Certificate of Deposit

Rates on bank accounts, such as checking and savings accounts, have been falling. Want to make sure that your interest rate won't get cut by the bank anymore? Lock-in a rate now with a Certificate of Deposit.




Lock <<</a>/a>/a>in a Rate of Return With a Certificate of Deposit

If you have a bank savings account, you've probably noticed that the interest rate on the account has been steadily decreasing. Do you want to make sure that your rate won't get cut by the bank anymore? Lock-in an interest rate with a Certificate of Deposit.

The CD (short for Certificate of Deposit) is a bank product that gives savers a fixed rate of return for a specific period of time. That means no surprise rate cuts. The rate you get the day you deposit your funds will be the rate you earn for the entire term of the CD.

During the term of the CD, you can't access your principal (the amount you deposited) without incurring a penalty, but you get rewarded for the lack of access with a bigger interest rate than on a savings accounts.

How long the CD term runs is up to you. You can choose a term as short as three months or as long as ten years. In many cases, the longer the term of the CD, the higher the interest rate you get - but this isn't always the case. A bank may need a quick infusion of deposits and may offer a special high rate on a short term CD.

When the CD matures, banks will give you a grace period to close the CD account and withdraw your money.

During the grace period, you can choose not to close the CD and even add money to the account. In this case, at the end of the grace period, the bank will "roll over" your CD for the same time period as before, but at the then current rate which could be lower or higher then the original rate. It's like opening a new CD without having to re-apply.

Besides the "regular" CD described above, you may encounter some other types of CD accounts. The concept is the same, but there may be a few extra perks. For instance, you may come across a "Penalty-free Withdrawal CD." This CD will allow a depositor to withdraw funds a certain amount of times before the CD matures without penalty. The obvious benefit to this CD is that if you need some of the money before the CD matures, you'll get fee-free access to it. The drawback is that usually the interest rate on this type of CD is lower than in a normal CD with a comparable term to maturity.

Where can you get a CD? Certificates of Deposit are offered at most local banks and credit unions. But don't neglect to check the rates at online banks. Many online banks (also called Internet banks) can offer higher CD rates because they have lower overhead expenses than a local brick-and-mortar bank.

Visit eMoneyCentral.com to get daily updates on the highest CD rates available at online banks.

credit Link

http://www.emoneycentral.com

certificate of deposit